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Adopted Regulations

Amendment to General Regulations of the Banking Board

October 17 , 2005

Part 6
ADDITIONAL AUTHORITY OF BANKS, TRUST COMPANIES, SAVINGS
BANKS AND SAVINGS AND LOAN ASSOCIATIONS PURSUANT TO
BANKING LAW, SECTIONS 14-g and 14-h
(Statutory Authority: Banking Law Sections 14-g, 14-h)

Part 6 is amended by adding a new Section 6.7 to read as follows:

§6.7 Additional Authority of Banks and Trust Companies to Underwrite and Deal In Certain Securities, Including Municipal Bonds.

  1. The Banking Board hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between banks and trust companies and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.
  2. The Banking Board hereby finds that Section 24 (Seventh) of Title 12, United States Code and Part 1 of Title 12, Code of Federal Regulations permit a national bank to (1) deal in, underwrite, purchase and sell Type I securities (including, in the case of a well capitalized national bank, municipal bonds as defined therein) in an amount not limited to a specified percentage of the bank’s capital and surplus; and (2) deal in, underwrite, purchase and sell Type II securities, provided the aggregated par value of such securities issued by any one obligor held by the bank does not exceed 10 percent of the bank’s capital and surplus.
  3. Definitions
  1. The term “Type I” securities shall have the same meaning as in 12 Code of Federal Regulations section 1.2(j), except that it shall include municipal bonds only if a bank or trust company is well capitalized.
  2. The term “Type II” securities shall have the same meaning as in 12 Code of Federal Regulations section 1.2(k).
  3. The term “Capital stock, surplus fund and undivided profits” shall have the same meaning as in Banking Law Section 103.
  4. The term “municipal bonds” shall have the same meaning as in 12 Code of Federal Regulations section 1.2(g).
  5. The term “well capitalized” shall have the same meaning as in Part 208, section 208.43(b)(1) of Title 12, Code of Federal Regulations, in the case of a bank or trust company that is a member of the Federal Reserve System, and the same meaning as in Part 325, section 325.103(b)(1) of Title 12 Code of Federal Regulations, in the case of a bank or trust company that is not a member of the Federal Reserve System; provided, however, that in no event will a bank or trust company be considered well capitalized if it is subject to any written agreement, order, capital directive or prompt corrective action directive issued by the Superintendent to meet and maintain a specific capital level for any capital measure.
  1. 1. A bank or trust company may deal in, underwrite, purchase and sell Type I securities for its own account. The amount of Type I securities that the bank or trust company may deal in, underwrite, purchase and sell is not limited to a specified percentage of its capital stock, surplus fund and undivided profits; and

    2. A bank or trust company may deal in, underwrite, purchase and sell Type II securities for its own account. The aggregate par value of Type II securities issued by any one obligor held by the bank or trust company may not exceed 10 percent of its capital stock, surplus fund and undivided profits.

  2. The authority provided by subsection (d) shall not limit any other authority contained in the Banking Law or regulations.
  3. Investments made under subsection (d) shall not be taken into account in computing the limitation on loans to one person contained in Section 103 of the Banking Law.

Explanatory All Institutions Letter

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